FCA published a letter requesting the CEOs of IFPRU investment firms and BIPRU firms to review their regulatory reporting practices. The CEOs are requested to ensure that the regulatory reporting practices are fit for purpose, comply with the relevant reporting provisions, and produce materially accurate data. FCA plans to review a sample of firms’ returns, as of October 01, 2018. If it finds that firms continue to submit materially inaccurate, incomplete, and/or poor quality data, it will then consider the next steps to improve the standards of returns.
FCA uses regulatory returns to assess prudential risk and to understand business models, financial positions, and risk exposures of firms, in addition to identifying trends within and across sectors. In its letter, FCA has identified the most common issues observed with returns, which are:
- Failure to complete the underlying templates within the common reporting framework (COREP) submissions, due to inadequate understanding of the prudential rules
- Failure to submit certain returns, such as the financial reporting return
- Incorrectly calculated total sum of risk exposures across various risk categories (for example, market and credit risks), leading to an inaccurate figure for capital requirements of firms
- Inconsistency in COREP returns—EBA validation rules dictate that certain data points submitted across different templates within COREP should show identical values or equal the sum of a number of other values
- Reporting using incorrect units
- Not reporting cumulatively (on a year-to-date basis) on the FSA002 income statement
Related Link: FCA Letter (PDF)
ESG and climate expert for P&C insurance; IFRS 17 specialist and chartered accountant; extensive experience in both life and non-life insurance, with focus on capital management, financial performance, and financial reporting.
Previous ArticleESAs Publish Report Analyzing Impact of Big Data in Financial Sector
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards
The Swiss Federal Council recently decided to further develop the Swiss Climate Scores, which it had first launched in June 2022.